No. 474.
Mr. Heap to Mr. Hunter .

No. 135.]

Sir: The political, financial, agricultural, and industrial condition of this regency during this year has, upon the whole, been satisfactory.

1. The policy of the Bey in drawing closer the ties which unite his country to the Ottoman Empire has resulted in giving him greater security from foreign aggression, as an attack on him might endanger the status quo of the “eastern question,” which the great powers of Europe do not seem, for the present at least, to be desirous of disturbing. I had the honor to transmit in my dispatch No. 111, dated November 23, 1871, a translation of the Sultan’s firman to the Bey, confirming him in his position as hereditary ruler of the regency of Tunis, and covering him with his protection as his suzerain.

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2. The internal state of the country is generally quiet. The facility of evading the payment of taxes by the tribes on the borders of the great desert, and near the frontier of Algeria, has rendered them to a certain degree independent of the Bey’s authority. Hitherto he has had a sufficient military force to compel these tribes to fulfill their duty to him, but the narrow limit to which his expenditures have been restricted has obliged him to reduce his army to the most moderate number of badly armed and poorly paid troops, who inspire the active bedouin with little awe.

3. The relations of the United States with this government are on the most friendly footing, and I have much pleasure in bearing testimony to the uniform cordiality and kindness of the Bey and his ministers whenever I have occasion to see them. The presence of our ships of war in these waters has always a beneficial influence, and the Bey is pleased to receive the visits of their commanders.

4. The finances of the government having, through extravagance, venality, and maladministration, been brought to a most deplorable state of confusion, the attention of foreign governments, more especially those whose subjects here are the most numerous, was called upon to apply some remedy to this state of things. The complaints of the Bey’s foreign creditors had from time to time been quieted by various expedients, but each successive shift only increased the embarrassment when a new pay-day came around, until it became evident that unless some radical measures were devised, the Tunisian government, as well as its creditors, would be involved in financial ruin.

Under the auspices of England, France, and Italy, a commission was created in 1869, composed principally of foreigners of those three nationalities, which was charged with the collection of the revenue, or the best part of it, and, after reserving the amount necessary for the support of the government, with the payment of the interest of the public debt.

When a schedule of the liabilities of the government was made, the total amount was found to be so large that it was evident the country could not bear the taxation necessary to pay the interest of it, even if this were reduced from the exorbitant rates of 12, and even 18 per cent., heretofore allowed.

Two measures which caused great discontent and loud complaint were adopted.

First, the debt was reduced by cutting down each claim by an average of one-half its nominal value; and second, by the reduction of the interest to 5 per cent. These arbitrary measures bore hardest on the most honest creditors, but as these were in a very small minority, their outcries were unheeded, and they are now generally satisfied that the case required this heroic treatment, and without it it would have been impossible to save the remnant of their fortune. Even with this reduction of the debt the payment of the semi-annual coupon is made with difficulty, and the one due last July was paid with funds furnished by the prime minister, who was indemnified by the sale of bronze guns from the forts of the regency, which have been replaced with old and worthless iron ones furnished by the bankers Erlanger, of Paris, in 1864 and 1865.

5. These guns have formed the basis of a claim by these bankers, sustained by the German government, for over six millions of francs, which, under a threat of coercive measures, was recognized by the Bey and paid in August last. * * * * *

6. The claim of an agricultural company to whom the Bey had granted a favorable concession or charter, with valuable immunities and privileges, [Page 1132] threatened at one time to involve him in serious difficulties with Italy, but through the timely intervention of the English and French governments it was submitted to arbitration. The Bey, confiding in the justice of his case, appointed an Italian and a Frenchman to represent him, and accepted for fifth arbitrator or umpire the president of the superior court of Italy, after the Italian government had declined in succession all the persons proposed by the Bey. The board met at Florence, in Italy. After rejecting a claim for enormous consequential damages, the tribunal decided that the direct ones should be assessed, and appointed two of its members to visit Tunis for this purpose. One of these has been instructed to use his influence with the Bey to induce him to grant an indemnity without waiting for their award, which it is foreseen will be extremely small.

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7. The success of the Erlanger claim has warmed into life one that was thought dead half a century ago. This is a claim of the representatives of an Austrian subject for saddlery and harness furnished a minister of a former Bey, and was originally for four hundred thousand francs; by compounding the interest at 24 per cent. per annum this sum has swelled to one hundred and twenty millions. The claim is sustained by Austria, but for the sake of prompt payment it consents to accept fourteen and a half millions.

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8. After several years of scarcity throughout the regency, and two of a general failure of the crops, a change for the better commenced in 1868, which has continued until they have come up this year to a full average. The winter of 1867 and 1868 was one of frightful suffering to this people. A famine, followed by a deadly epidemic, carried off fully one-third of the inhabitants. It is calculated that of the rural population one half was swept away. The loss of cattle for want of pasturage was also immense.

The olive and grain crops have been somewhat above the average this year. Olive-oil is the most valuable production of the country; an abundant crop is a source of wealth to the whole community. In fact the prosperity of the country rises and falls with the abundance or scarcity of this crop. For the first time in many years wheat is being exported, principally to Sicily, where the harvest was short. In the absence of statistics it is impossible to give a reliable estimate of the quantity produced. The salutary effects of an equitable system in the collection of taxes introduced by the financial commission are demonstrated by the greater breadth of land put under cultivation, which has been limited this year only by the means of the farmers in manual and animal labor.

9. There is great undeveloped mineral and agricultural wealth in this regency, but the unfortunate issue of every effort of the government to develop it has discouraged the Bey from offering inducements to foreign capitalists to invest in useful enterprises in his country. He has declared that, as European speculators who obtain “concessions” usually find means of holding him responsible for the losses they may sustain, he prefers to allow the resources of the country to remain undeveloped rather than expose himself to the reclamations of foreign governments which he is too weak to resist.

10. He has departed, however, in one instance from this policy, with no bad result.

In 1871 he granted a charter to an English company for several short railways, two of which are completed and in successful operation. The [Page 1133] company has given, so far, no trouble to the government, which was called upon for no other subsidy than the land on which the roads and stations are constructed. This satisfactory result has encouraged the Bey to grant charters for other and longer roads, that will open to commerce a rich grain-growing region, which is now excluded from its benefits by the want of economical transportation.

11. Some American capital is invested here in the improvement of the breed of cattle and horses, as well as in farming. Although the parties interested have had occasionally to complain of depredations by the Arabs, the local police has always rendered promptly the assistance and protection required, without obliging me to trouble the government with puerile complaints, and the Bey has more than once expressed his satisfaction at the manner in which this useful enterprise is conducted, and which contrasts so favorably with others.

I am, &c.,